Thanks for replying. Unfortunately that didn't work. When I put a link to my own image uploaded to WordPress nothing appeared. Out of frustration I put the image on a different server and linked to that. The image appears now.

Strange. We've had issues with private blogs not displaying images, but not with public ones. Can you give me the WordPress.com URL of the image you uploaded for your header so I can see if it opens for me?

The images was definitely uploaded to the correct blog (it appeared on the custom header page). I tried uploading the image several times, including going back to the default image and then uploading my image again. I think I'm going to stick with using an image on a different server and linking to that.

An image that you insert into custom CSS can't be uploaded via the Custom Header option. You've got to upload the same image using the regular Image Uploader on the Write Post page. Then, grab the URL. Put THAT URL in the code.

It's a total grind, but that's how it has to be done. Essentially, that's what you're doing with hosting it on another server. There was a long thread last year that went into details about where the Custom Uploader uploaded images go vs the others, but I can't find it.